IV 

113TH CONGRESS 

2D SESSION H. RES. 545 

Expressing the sense of the House of Representatives that the Federal Government should adopt and use accrual basis generally accepted accounting principles for Government budgeting, financial reporting, and performance evaluation purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 7, 2014 

Mr. RENACCI (for himself, Mr. CONAWAY, Mr. SHERMAN, and Mr. MURPHY

of Florida) submitted the following resolution; which was referred to the 

Committee on Oversight and Government Reform 

RESOLUTION 

Expressing the sense of the House of Representatives that 

the Federal Government should adopt and use accrual 

basis generally accepted accounting principles for Government budgeting, financial reporting, and performance 

evaluation purposes. 

Whereas President Thomas Jefferson instructed Secretary of 

the Treasury Albert Gallatin in 1802: ‘‘If . . . there can 

be added a simplification of the form of accounts in the 

Treasury Department, and in the organization of its officers, so as to bring everything to a single centre, we 

might hope to see the finances of the Union as clear and 

intelligible as a merchant’s books, so that every member 

of Congress, and every man of any mind in the Union, 


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•HRES 545 IH 

should be able to comprehend them, to investigate 

abuses, and consequently to control them.’’; 

Whereas, in 1949, the findings of the first Hoover Commission were endorsed by President Harry Truman, and the 

Commission’s recommendations were issued to Congress 

in nineteen separate reports, resulting in the passage of 

the Budget and Accounting Procedures Act of 1950, giving the General Accounting Office the authority to make 

it a requirement that agency accounting systems be 

maintained on the accrual basis in order to secure Comptroller General approval; 

Whereas, in 1955, the findings of the second Hoover Commission Report were endorsed by President Eisenhower 

and reported to the United States Congress which passed 

Public Law 84–863, in 1956, establishing the following: 

‘‘As soon as practicable . . . the head of each executive 

agency shall, in accordance with the principles and standards prescribed by the Comptroller General, cause the accounts of such agency to be maintained on an accrual 

basis to show the resources, liabilities, and costs of operations of such agency with a view to facilitating the preparation of cost-based budgets . . .’’; 

Whereas, in 1967, President Lyndon Johnson’s Commission 

on Budget Concepts, a temporary ‘‘blue ribbon’’ commission headed by the Secretary of the Treasury David Kennedy, recommended that the accrual basis of measuring 

receipts and expenditures be substituted for the cash 

basis at ‘‘as early a date as feasible.’’; 

Whereas, in 1969, President Richard Nixon reaffirmed the 

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•HRES 545 IH 

ernment from the cash basis to the accrual basis of accounting; 

Whereas, in 1976, before the Committee to Investigate a Balanced Federal Budget of the Democratic Research Organization on Implementing Accrual Accounting Within the 

Federal Government, Comptroller General Elmer Staats 

stated the following: ‘‘In summary, accrual accounting in 

the Federal Government has been a legal requirement 

since 1956. Since accrual accounting is fundamental to 

sound financial management it has always been a basic 

tenet of our principles and standards. I believe that current economic conditions and the extensive government 

use of deficit financing have accentuated the need for the 

Federal Government to provide better overall financial reports that show clearly for the benefit of the Congress 

and the public the major aspects of its financial position 

and operations.’’; 

Whereas, in 1984, the United States Treasury prepared its 

own prototype version of the United States Government’s 

annual consolidated financial statements with a ‘‘reconciliation schedule of accrual operation results to the 

cash basis budget as of September 30, 1983 and 1982,’’ 

but deviated from accrual accounting by removing, from 

the financial statements, the actuarially computed longterm liability for Social Security and Medicare; 

Whereas, in October 1990, a ‘‘Memorandum of Understanding on Federal Government Accounting Standards 

among the General Accounting Office, the Department of 

the Treasury, and the Office of Management and Budget’’ established the current Federal Accounting Standards 

Advisory Board to determine ‘‘accounting standards’’ 

that are appropriate for the United States Government’s 


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annual financial statements, as requested of the Director 

of the Office of Management and Budget in the Chief Financial Officers Act of 1990; 

Whereas, in November 1990, President George H.W. Bush 

signed the Chief Financial Officers Act of 1990, establishing a Chief Financial Officer for the United States, 

within the Office of Management and Budget, for each 

major United States department and agency, and requiring the annual financial statements of the United States 

Government to be publicized annually; 

Whereas, in October 1992, the National Executive Committee 

of the Association of Government Accountants adopted 

the recommendations of the organization’s Truth in 

Budgeting and Accounting Blue Ribbon Task Force, calling for, among other things, ‘‘the use of an accrual basis 

of accounting, including realistic treatment of all unrecorded and contingent liabilities’’; 

Whereas, in 2003, Federal Reserve Chairman Alan Greenspan, in testimony before Congress, stated that the use 

of accrual-basis accounting for the Federal Government 

‘‘would lay out more clearly the true costs and benefits 

of changes to various taxes and outlay programs and facilitate the development of a broad budget strategy . . . 

In doing so, these accounts should help shift the national 

dialogue and consensus toward a more realistic view of 

the limits of our national resources.’’; 

Whereas, in 2009, the American Institute of Certified Public 

Accountants, in a letter to the Federal Accounting Standards Advisory Board, stated that ‘‘we continue to believe 

that the social insurance programs . . . are currently executed and publicized as exchange programs and that 


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there should be expense and liability recognition.’’ (on the 

accrual basis); 

Whereas the 2012 financial statements for the United States 

Government refer to the accounting system used by the 

Department of the Treasury in preparing annual reports 

as a ‘‘modified-cash’’ basis, not an accrual basis; 

Whereas, on June 25, 2012, the Governmental Accounting 

Standards Board, an organization created to establish 

and improve standards of State and local governmental 

accounting and financial reporting, voted to approve 

statement No. 68, ‘‘Accounting and Financial Reporting 

for Pensions’’, improving the way State and local governments report their pension liabilities and expenses, and 

resulting in a more faithful representation of the full impact of these obligations by reporting net pension liabilities on the balance sheet (providing citizens and other 

users of these financial reports with a clearer picture of 

the size and nature of these financial pension obligations); 

Whereas the adoption of Governmentwide accrual accounting 

for budgeting and financial reporting would not infringe 

on the explicit constitutional power of Congress and its 

respective committees to appropriate and collect— 

through taxation, fees, and borrowing—Federal funds determined on a cash-flow basis, necessary for the collection, disbursement, and management of the United 

States cash resources; and 

Whereas the continuing use of the cash basis of accounting 

for the compilation of the annual budget substantially 

understates Federal expenses and annual budget deficits, 

and the use of modified cash-hybrid accrual accounting 

for the preparation of the United States Consolidated 


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Annual Financial Statements does not present fairly, nor 

accurately, the financial condition and results of operation of the consolidated departments and agencies of the 

United States: Now, therefore, be it 

1 Resolved, That the House of Representatives— 

2 (1) agrees to consider legislation to implement 

3 accrual basis generally accepted accounting prin4 ciples for United States Government budgeting, fi5 nancial reporting, and performance measures; 

6 (2) acknowledges that the use of accrual basis 

7 accounting for United States Government budgeting, 

8 financial reporting, and performance measures would 

9 provide a more accurate measure of the United 

10 States Government’s finances and their impact on 

11 the Nation’s economy; 

12 (3) requests the Comptroller General of the 

13 United States to prescribe the manner in which ac14 crual based generally accepted accounting principles 

15 can be applied to United States Government budg16 eting, financial reporting, and performance measures 

17 in the fiscal year following the passage of legislation 

18 to implement the reforms outlined in this resolution; 

19 and 

20 (4) recognizes the use of accrual accounting 

21 standards in the Federal Government can assist in 

22 management improvement for the agencies and deVerDate Mar 15 2010 01:33 Apr 08, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\HR545.IH HR545

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1 partments of the Federal Government—publicizing 

2 true costs, minimizing government waste, and con3 trolling inefficient spending, especially on long-term 

4 Government contracts. 

Æ 


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